Morguard Real Estate Investment Trust (MRT-UN) Q3 2024 earnings summary

Executive summary

• Revenue for Q3 2024 was $63.3 million, up 1.2% year-over-year, and net income was $15.6 million, reversing a $39.7 million loss in Q3 2023, mainly due to lower fair value losses on real estate properties.

• Net operating income for Q3 2024 increased 5.6% year-over-year to $32.2 million, driven by higher basic rent in enclosed malls and improved industrial performance.

• Funds from operations (FFO) for Q3 2024 rose 6.9% to $14.9 million, while adjusted funds from operations (AFFO) increased 10.9% to $8.8 million.

• Distributions per unit remained stable at $0.06 for the quarter, with a payout ratio of 42.9% on AFFO.

• Retail traffic and sales continue to recover post-pandemic, supporting positive trends in retail asset performance.

Financial highlights

• Revenue for the nine months ended September 30, 2024, was $191.7 million, up 1.3% year-over-year; NOI was $95.0 million, up 2.6%.

• Net loss for the nine months was $23.4 million, an improvement from a $46.7 million loss in 2023, due to reduced fair value losses.

• FFO for the nine months was $42.4 million (down 6.1% year-over-year); AFFO was $24.2 million (down 11.4%).

• Interest expense increased 5% year-over-year to $16.8 million, mainly due to higher mortgage rollover costs.

• Liquidity stood at $91.9 million at the end of Q3, down from $98 million in Q2 and $101 million at year-end 2023.

Outlook and guidance

• A decline in net operating income of $13–15 million is expected in 2025 due to lease resets at Penn West Plaza, with a projected rebound of $4–6 million in 2026.

• Expects elevated capital needs above reserve amounts into 2024 and 2025, particularly for office leasing capital.

• The Trust expects the new EIFEL tax rules to limit interest deductibility, increasing taxable income allocated to unitholders in 2024 and beyond.

• Positive about ongoing leasing activity and expects most retail tenants to renew in Q4 2024.